Dear Ms. Farber-Condon,
Thank you for contacting me regarding S. 2250, the Mortgage Forgiveness Tax Relief Act, and federal efforts to prevent additional tax burdens resulting from foreclosures. I appreciate hearing from you on this very important issue.
Thousands of New Mexicans have faced foreclosures from subprime loans. In addition to the impact on the homeowner, foreclosures affect entire neighborhoods by reducing property values in the surrounding area. Housing prices have declined significantly statewide in New Mexico since 2006, costing the state billions in diminished home values and lost tax base. Additionally, cancellation of debt (COD) that can result from foreclosure has previously been labeled as taxable income, adding to the financial hardship faced by distressed homeowners.
I believe that Congress has a responsibility to help solve the ongoing foreclosure crisis. The foreclosure crisis does not just affect those with bad loans. It threatens every homeowner in the state, and it is costing middle class New Mexicans millions in lost assets.We should encourage mortgage servicers to avoid unnecessary foreclosures. Although existing laws and loan modification programs enacted in the immediate aftermath of the crisis have helped thousands of families, thousands more still need help, including the nearly one out of every 925 New Mexican homeowners currently facing foreclosure.
While a member of the House of Representative in 2007, I voted for the Mortgage Forgiveness Debt Relief Act which the president signed into law. The act allows taxpayers to exclude cancellation of debt from taxable income, which helps homeowners going through foreclosure avoid additional taxes as a result of loan forgiveness. In the current law, the ability to exclude COD is set to expire on January 1, 2013. S. 2250 would extend the expiration date to the end of 2014. Senator Debbie Stabenow (D-MI) introduced S.2250 in the Senate on March 29, 2012. Upon introduction, the bill was referred to the Senate Committee on Finance, where no further action has yet occurred.
Although these programs move us in the right direction, without critical improvements I fear that millions of struggling homeowners will continue to go without the help they need. Home prices in many states have begun to rise again, but too many middle class Americans are still unable to qualify to buy a home or even refinance. Please be assured that I will keep your thoughts in mind should S. 2250 or any similar legislation related to housing come before the Senate for a vote.
Thank you again for sharing your thoughts with me. Please feel free to contact me with your concerns regarding any federal issue by visiting my website at www.tomudall.senate.gov. For more information, you may also visit my Facebook page at http://www.facebook.com/pages/
Very truly yours,
Tom Udall
United States Senator